Question

article related to managment accounting

put the link please and 1 page summary of the article

Answer 1

• Management Accounting is the presentation of accounting information in order to formulate the policies adopted by management and assist in day to day activities. In other words, it helps management to perform all its function including planning, organizing, staffing, directing & controlling.
• Management Accounting involves partnering in management decision making, devising planning and performance management systems, and providing expertise in financial reporting and control to assist management in the formulation and implementation of an organization's strategy.

Management accounting as practice extends to the following three areas:

• Strategic management — advancing the role of the management accountant as a strategic partner in the organization
• Performance management — developing the practice of business decision-making and managing the performance of the organization
• Risk management — contributing to frameworks and practices for identifying, measuring, managing, and reporting risks to the achievement of the objectives of the organization.

The function of Management Accounting are

Managerial accounting performs the following functions in general

• Profitability: Management accounting determines the profit from a particular product, project, or line of business.
• Break-even analysis: It determines the number of units at which the organization will attain a no profit no loss situation.
• Forecasting: It determines the bottlenecks in the organization and their impact on the organization.
• New product analysis: It prepares analysis for the new product in terms of standard costs, actual cost, and reasons for deviations.
• Stock valuation: Determine the direct and indirect costs of stock in hand and presenting it to management
• Variance analysis: Performing trend analysis for various costs incurred and understanding the causes for the variances.
• Capital budgeting analysis: Understanding the need for acquiring fixed assets and the costs involved and allocation of finances to the best available option.
• Aids in Financial accounting: Management accounting presents financial information at regular intervals and hence it aids in the preparation of financial statements at year-end.

Benefits of Management Accounting

Management accounting is very beneficial and hence is being used widely now. The benefits are as follows:

• Planning - In management accounting, the financial information and non-financial information are presented at regular intervals say weekly, fortnightly to the management. This presentation includes forecasts, budgets, and in-depth analysis. Hence it assists the management in planning the business activities.
• Decision making -Since management accounting presents various charts, forecasts, and analysis the management uses it for decision making.
• Identify early signs of problems- If a product is not performing well the management can identify it early on as the accounts are presented at regular intervals. This will aid in overcoming the constraints early on and avoiding future losses.
• Strategic management- Based on the information presented in management accounting, the management can take decisions about continuing a product or modifying the sale strategy. Since management accounting is not regulated by any law, the management can decide the areas that require more analysis, investigation and accordingly, draw up strategies.